What the Libertarians get wrong about the FED

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The Libertarians believe that the FED sets 'the' interest rate. Recessions are thought to be caused by a previous expansion when the interest rate was 'set' too low. The investment caused by lower interest rate is coined 'malinvestment'.

The FED usually only does two things: buys and sell bonds (decreases and increases the private supply of money) and sets the interest rate for loans to member banks for overnight deposits.

Banks are free to actually set whatever interest rates (applicable to whatever state laws) they want. Banks set short term rates close to what the FED charges for overnight deposit - because that is just over cost. But for longer term rates, they can set whatever rate they think is safe. If they anticipate inflation, for example, the long term interest rates will rise. This is the key fact Libertarians ignore.

The fact that during the 80's long term rates were not too high proved that the market did not think there would be much inflation, and hence the FED did not set it's overnight rate too low or buy too many bonds (increase in the money supply was about right).

This is true of much of the modern history of the FED (save for the high inflation of the 1970's) and so proves the Libetarian hypothesis false. Recessions are not caused by previous expansions where the FED 'set' the interest rate too low.

Dr. Econ's picture
Dr. Econ
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Quote Dr. Econ:

The Libertarians believe that the FED sets 'the' interest rate. Recessions are thought to be caused by a previous expansion when the interest rate was 'set' too low. The investment caused by lower interest rate is coined 'malinvestment'.

Small "l" libertarians do not believe that the FED sets interest rates. What Austrian economists,not the same as libertarians, say is that the Fed lowers interest rates below the market level. It is done by injecting money into the system. A larger supply of loanable funds leads to a lower interest rate. Supply and Demand.

I'll refer you to this article for your other objections. I'm not, nor never claimed to be, a PhD in economics. So from time to time I actually have to provide links.

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LysanderSpooner
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Quote LysanderSpooner:
Quote Dr. Econ:

The Libertarians believe that the FED sets 'the' interest rate. Recessions are thought to be caused by a previous expansion when the interest rate was 'set' too low. The investment caused by lower interest rate is coined 'malinvestment'.

Small "l" libertarians do not believe that the FED sets interest rates. What Austrian economists,not the same as libertarians, say is that the Fed lowers interest rates below the market level. It is done by injecting money into the system. A larger supply of loanable funds leads to a lower interest rate. Supply and Demand.

I'll refer you to this article for your other objections. I'm not, nor never claimed to be, a PhD in economics. So from time to time I actually have to provide links.

You mean you dont understand libertarian economics, so you have to resort to others to do your talking for you.

I will try one more time to explain this. There is not a single interest rate in the economy. There are many. The fed has power to set the overnight rate it charges to member banks. It also buys and sells bonds. That's it. The fed has no control over banks outside it's system, nor does it madate the interest rates charged by banks. The short term rate pretty much reflects the costs banks use when they borrow money from the FED with the overnight rate. But the longer term rates can be set to nearly anything (within financial regulations) they want.

If the banking system thought there was going to be inflation in the future caused by too much money or too low an overnight rate, then it would raise the long term rates so the bank does not loose money.

This actually happened in the 1970's when inflation was a significant problem. In the history of the FED, it is a rare thing.

To repeat, expansions - which take place over years - sometimes half a generation - cannot possibly be cause by interest rates that are too low. Hence, recessions are not caused by previous expansions that had too loose a money supply.

Dr. Econ's picture
Dr. Econ
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Jul. 31, 2007 4:01 pm

The fed is a private entity owned by the decendents of Rockefellers, Warburgs, Rothchilds, whether blood or business related. At its illegal inception, by the Federal Reserve Act, signed into law by Wilson in return for the elite banksters' support, it took away control of the United States money supply from Congress as set forth in the Constitution and gave it to the private banking elite. Wilson, who later regretted it said, "I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is now controlled by its system of credit. We are no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men". Congress man Lous Mcfadden also expressed the truth after the passage of the bill "A world banking system was being set up here . . . a superstate controlled by international bankers . . . acting together to enslave the world for their own pleasure. The Fed has usurped the government."

By manipulating interest rates and contolling the creation of money through government indebtedness the fed, which is tax exempt, but 100% of the income tax that Americans pay goes right to the Fed to pay off this debt, which they perpetually create. It is no coincidence that the Federal Income tax law was enacted in the same year as the Federal Reserve Act. It was needed to finance this scam.

The fed is an unConstitutional fraudulent scam. It is a scam which swindles wealth away from the U.S. public and lines the pockets of greedy international bankers, a scam which is at the root of every financial crisis and war we have had since the Fed's existence, a scam which is based on a debt monetary system and fractional reserve banking, a scam which coincided with unconstitutional enactment of Federal income tax . The fed makes huge profits at the expense of American taxpayers.

With every bailout the government tries, that ultimately fails, more debt is created and is inflationary, the more the fed profits.

Some uninformed or ignorant believe that the fed did not cause the great depression. They did.

During the "roaring" 1920s, the fed expanded the money supply by a staggering 62%. This lead to a period of economic boom and inflation. Politically connected insiders knew this and loaded up on debt and bought assets before inflation set in. A new type of stock loan was created called a margin loan. A borrower could put down 10% and get a 90% loan on stock. Thus a borrower could own $1000 worth of stock for $100. The catch was that the loan could be called anytime (margin call) and had to be repaid within 24 hours. Ususally resulting in the stock having to be sold.

So, in 1929 insiders at the fed decided to hike up interest rates. The insiders and their politically connected knew what this would cause, so they quietly exited the market and converted their holding into cash right before the crash. They stopped making loans and called in the margin loans causing a panic sell off and the market to crash. Massive runs on banks caused some 16,000 banks to collapse.

The insiders being flush with cash were now able to buy asstes for pennies on the dollar and being unleveraged were able to borrow even more money and buy up more asstes at the bottom of the depression. The conspiring international banksters and thier insiders not only bought up rival banks at deep discounts but they were also able to buy up whole corporations for pennies on the dollar. It was the greatest robbery in American history.

Think this was the end of it, think again. The fed shrank the money supply which deepend the depression. That the depression was caused by speculators is a lie the fed tells. The fed and negative interest rates were the real culprit. The speculators were following the false signal the fed was sending via artificially cheap interest rates.

Now, in order to make more profits from ther creation of money the fed decided that the gold standard had to be removed be cause this limited the amout of money they could create. So, in 1933 , their puppet Roosevelt, by executive order, and under the guise of helping to end the depression, declared under threat of 10 years imprisonment and/or a $10,000 fine, all Americans were ordered to turn in their gold holding for $20.67/ounce, robbing the public of the rest of their wealth.

Congressman McFadden tried to expose the secretary of the treasury, comptroller of the currence and the board of governors of the fed for their criminal acts, conspiracy,fraud and, treason but died suddenly of a supposed heart attack. This was after 2 other attempts on his life by shooting and poisoning. How convinient.

No matter what the Federal Reserve does, there will be boom/bust cycles. Insiders who know what the Federal Reserve is going to do have the opportunity to profit immensely.

War is also immensely profitable to the international banksters and the fed, as it necessitates the creation of huge debt to finance it. The American public was decieved into WWI by purposely letting the Germans sink the Lusitania, that they (the Germans had warned Americans not to board the ship ion newspaper ads) ,into WWII because FDR had prior knowledge of the Japanese attack on Pearl Harbor, and into Vietnam with the false (never happened) Gulf on Tonkin Incident, and now the phony war on terror.

The Federal Reserve System and its illegal, criminal, unConstitutional acts needs to be abolished.

Brookesmith
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Aug. 3, 2012 7:00 pm
Quote Dr. Econ:
Quote LysanderSpooner:
Quote Dr. Econ:

The Libertarians believe that the FED sets 'the' interest rate. Recessions are thought to be caused by a previous expansion when the interest rate was 'set' too low. The investment caused by lower interest rate is coined 'malinvestment'.

Small "l" libertarians do not believe that the FED sets interest rates. What Austrian economists,not the same as libertarians, say is that the Fed lowers interest rates below the market level. It is done by injecting money into the system. A larger supply of loanable funds leads to a lower interest rate. Supply and Demand.

I'll refer you to this article for your other objections. I'm not, nor never claimed to be, a PhD in economics. So from time to time I actually have to provide links.

You mean you dont understand libertarian economics, so you have to resort to others to do your talking for you.

There is no such thing as libertarian economics. Libertarianism is a political philosophy, and that's all. If you mean Austrian economics, then yes, I plead guilty to not having a PhD in it. I'm sure most people who promote Keynesian economics can't explain all of it.

Quote Dr. Econ:

I will try one more time to explain this. There is not a single interest rate in the economy. There are many. The fed has power to set the overnight rate it charges to member banks. It also buys and sells bonds. That's it. The fed has no control over banks outside it's system, nor does it madate the interest rates charged by banks. The short term rate pretty much reflects the costs banks use when they borrow money from the FED with the overnight rate. But the longer term rates can be set to nearly anything (within financial regulations) they want.

Never said it did. You're right. The Fed sets rates at the discount window, it can set reserve requirements for member banks and and can engage in open market operations (counterfeiting).

Quote Dr. Econ:

If the banking system thought there was going to be inflation in the future caused by too much money or too low an overnight rate, then it would raise the long term rates so the bank does not loose money.

This actually happened in the 1970's when inflation was a significant problem. In the history of the FED, it is a rare thing.

To repeat, expansions - which take place over years - sometimes half a generation - cannot possibly be cause by interest rates that are too low. Hence, recessions are not caused by previous expansions that had too loose a money supply.

What causes the boom and bust cycle, then? If it isn't Fed interference in the market, then what? Animal spirits?

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LysanderSpooner
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Excellent history lesson. I would like to add that the Economic Chairs at the prominent universities are staffed by Keynesian Economist. These chairs are endowed by the bankers. In sum, Keynesian economists are shills for the bankers. And all the students who learn from them, like Dr. Econ., are useful idiots.

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LysanderSpooner
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One other event that I did not mention (thought it was getting a little long for those here with short attention spans) was 4 months before JFK was assassinated, he issued executive order 11110 that virtually would have eliminated the fed's ability to create fiat money by orgering the treasury to print United Stats notes up to the amount of silver bullion, coins and silver dollars held by the treasury which would have eliminated the demand for Federal Reserve Notes.

This would have prevented the national debt from reaching the bankrupting levels it has. Since virtually all of our debt has been created since 1963.

Brookesmith
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Aug. 3, 2012 7:00 pm

Very true, LysanderSpooner. The insiders at the fed and their political lackies have gotten their scheme down to a fine art that enables them to profit billions from taxpayers and when the debt bubble they are purposely creating is just about to explode they will have put their ill gotten wealth into something other than government bonds and securities, and the stockmarket, say gold, silver. Then when the crash does come they can buy up the rest of the world at rock bottom prices just as they did in the 30s. Then we can all be their slaves. All they have to do is keep fooling enough idiots to keep their scam going.

Brookesmith
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I do not consider that as a libertarian view of the fed. It is just the way it is. A big scam hoisted on the American people by the elite international bankers and their political lackies in government. And the sheeple continue to believe their lies.

Brookesmith
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Aug. 3, 2012 7:00 pm
Quote Brookesmith:... During the "roaring" 1920s, the fed expanded the money supply by a staggering 62%. This lead to a period of economic boom and inflation.

There was no inflation in the 20's. This essentially for reasons given in my earlier posts, which I shall not repeat here.

Quote Brookesmith:.So, in 1929 insiders at the fed decided to hike up interest rates.

Like you wanted them to? Your story is wholly inconsistent - at times blaming the fed for too loose a money supply, and then other times blaming them for a money supply that is too tight.

Get your story straight!

As near as I can tell, the interest rate rise ws not even that large - a few percent. But how much of this was the result of the FED or the result of the financial system, I don't know.

In any event, the highly leverage asset bubble was in full swing by the end of the 20's.

Just to repeat myself, the FED cannot continually increase the money supply because there would be inflation, and inflation would mean that bankers would increase the interest rate. And no, before you have another knee jerk reaction, there was no price inflation in the 20's.

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Dr. Econ
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Quote Dr. Econ:
Quote Brookesmith:... During the "roaring" 1920s, the fed expanded the money supply by a staggering 62%. This lead to a period of economic boom and inflation.

There was no inflation in the 20's. This essentially for reasons given in my earlier posts, which I shall not repeat here.

There was inflation in the 20's. Inflation is an an increase in money and credit, not higher prices. All things being equal, higher prices are the consequence of inflation. In the 20's, the price increases were offset by increases in production. So it appeared that prices were stable, when they should have gone down. The inflation layed the seeds for the bust in 1929, which was incidentally predicted by Austrian school economists.

The reason inflation is defined as price increases by mainstream (i.e. paid off )economists is that it takes the focus off the culprit. And lays it on businessmen or unions.

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LysanderSpooner
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Quote LysanderSpooner:

What causes the boom and bust cycle, then? If it isn't Fed interference in the market, then what? Animal spirits?

Well, there are many models. Economists often think there are 'shocks' to the system, and once a shock exists, it throws the economy into a persistent state. I think oil price hikes were responsible for many post war recessions - especially Bush (1)'s recession. The most recent recession (and in my opinion the Great Depression) is really do to an asset bubble. The asset bubble was fed by low taxes, outsourcing, and deregulation of financial instruments. But also the gambling nature of the investor class. It is interesting that we outlaw gambling because of it's deleterious effects on individuals, but we think nothing if the people with the same disease are in charge of the valuation of stocks and bonds.

Our most recent experience with austerity has shown recessions in Britain and other places that tried it.

And, as you know, there were many booms and busts before the FED.

I believe that the Keynesian model is essentially correct in the short run. People save, others invest, and the interest rate is not responsive enough to make every act of saving translate into an act of investment. Thus, during a shock, everyone tries to save, but that is impossible. Most importantly, investment is actually tied to current consumption - the more people increase demand, the more investment increases. So if everyone saves due to a shock, demand falls, investment falls, and the economy goes into recession.

This is different than the monetary model - but I think that works mainly in regular recessions with healthy economies.

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Dr. Econ
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Although this article is fairly lengthy, the pertinent part is toward the end explaining fed policy during the twenties. The narrative is nuetral and gives an account of the actions the fed took during this period. Discount rates were raised and lowered and securities were bought and sold. Yes all presumed normal operations of the fed. But there were those that had inside privledges to impending fed action that could with that knowledge act accordingly and profit handsomely from. After converting their holdings to cash and waiting until the markets fell and then buying back stocks, even whole corporations whose stock had plummeted generated immense wealth for them. It's not that difficult to figure out, especially when the players, both insiders and whistleblowers, their actions and statements are put in place. The fed may not have been directly the cause of the great depression, but the actions of its elite international bankster owners and their politically connected insiders were a direct contributor to, if not the cause of, the crash and resulting depression and those same players subsequent actions taking advantage of the results.

Brookesmith
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Aug. 3, 2012 7:00 pm
Quote LysanderSpooner:
Quote Dr. Econ:
Quote Brookesmith:... During the "roaring" 1920s, the fed expanded the money supply by a staggering 62%. This lead to a period of economic boom and inflation.

There was no inflation in the 20's. This essentially for reasons given in my earlier posts, which I shall not repeat here.

There was inflation in the 20's. Inflation is an an increase in money and credit, not higher prices.

No, inflation is precisely a sustained rise in the general price level. No two ways about it.

And deflation? Not a good idea. No one will invest if prices are falling.

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Dr. Econ
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Quote Brookesmith:

...After converting their holdings to cash and waiting until the markets fell and then buying back stocks, even whole corporations whose stock had plummeted generated immense wealth for them.

I'm not going to bother your insider trading fantasy because it happened after the markets fell. Thus, it is not the cause of the market falling.

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Dr. Econ
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DrEcon, "I'm not going to bother your insider trading fantasy because it happened after the markets fell. Thus, it is not the cause of the market falling."

The international bankers used the fed to engineer the bubble and ensuing crash. Call it what you want. But the actions taken by the fed cannot be disputed, they were what they were. And those with inside information and the well connected were able to use that info, acted accordingly and profited immensely.

From Gary Allen's "None Dare Call It Conspiracy"

"Using a central bank to create alternate periods of inflation and deflation, and thus whipsawing the public for vast profits, had been worked out by the international bankers to an exact science.

Having built the Federal Reserve as a tool to consolidate and control wealth, the international bankers were now ready to make a major killing. Between 1923 and 1929, the Federal Reserve expanded (inflated) the money supply by sixty-two percent. Much of this new money was used to bid the stock market up to dizzying heights."

More;

"To think that the scientifically engineered Crash of 1929 was an accident or the result of stupidity defies all logic. The international bankers who promoted the inflationary policies and pushed the propaganda which pumped up the stock market represented too many generations of accumulated expertise to have blundered into “the great depression.”"

http://search.yahoo.com/r/_ylt=A0oGdXV9hydQnWwAwnVXNyoA;_ylu=X3oDMTE1c2dibHRuBHNlYwNzcgRwb3MDMwRjb2xvA3NrMQR2dGlkA1ZJUDA0OV8xNTQ-/SIG=14jk2bjvp/EXP=1344796669/**http%3a//hidhist.wordpress.com/banksters/how-a-group-of-international-bankers-engineered-the-1929-crash-and-the-great-depression/

Brookesmith
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Aug. 3, 2012 7:00 pm

Here is another interesting little article about the fed and insiders of the 1929 crash and ensuing depression.

"The Wall Street Crash in 1929
In April, Paul Warburg sent out a secret warning to his friends that a collapse and nationwide depression had been planned for later that year.

Joseph P. Kennedy, John F. Kennedy's father. In 1929 he was worth 4 million dollars, in 1935 that had increased to over 100 million dollars
The money did not simply disappear in 1929 , it just ended up consolidated in fewer and fewer hands, as was planned.

It is certainly no coincidence that the biographies of all the Wall Street giants of that era: John D. Rockefeller; J. P. Morgan; Joseph Kennedy; Bernard Baruch; et al. all marveled at the fact these people got out of the stock market completely just before the crash and put their assets into cash or gold.

So, as all the bankers and their friends already knew, in August the Federal Reserve began to tighten the money supply. Then on 24th October the big New York bankers called in their 24 hour broker call loans.
This meant that both the stockbrokers and their customers had to dump their stocks on the stock market to cover their loans, irrespective of what price they had to sell them for. As a result of this the stock market crashed on a day that would go down in history as, "Black Thursday."

Here is what the Federal Debt Relief System writes: “In August of 1929, the Fed began to tighten the money supply continually by buying more government bonds. At the same time, all the Wall Street giants of the era, including John D. Rockefeller and J.P. Morgan divested from the stockmarket and put all their assets into cash and gold.”

http://search.yahoo.com/r/_ylt=A0oGkkjpkSdQVXAAVGJXNyoA;_ylu=X3oDMTE1MWw2MWlxBHNlYwNzcgRwb3MDNwRjb2xvA3NrMQR2dGlkA1ZJUDA0OV8xNTQ-/SIG=11ga851ap/EXP=1344799337/**http%3a//euro-med.dk/%3fp=3136

You can't ignore what Rockefeller, Morgan, Warburg, Wiggins, Kennedy, Baruch and others actually did. You can't erase or ignore actual facts. The fed purposely orchestrated the events that lead to the stock market crashing in 1929 and there were those that HAD inside information and used it to reap millions in gains.

Brookesmith
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Aug. 3, 2012 7:00 pm

Econ, if the Fed does not have the ability to effect expansion and contractions in the economy then what purpose does it serve? And I don't mean the two things you already mentioned. What I mean is what does their ability to do those two things actually do in the long run? IE: Why was the Fed created?

ah2
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Dec. 13, 2010 10:00 pm
Quote Dr. Econ:
Quote LysanderSpooner:
Quote Dr. Econ:
Quote Brookesmith:... During the "roaring" 1920s, the fed expanded the money supply by a staggering 62%. This lead to a period of economic boom and inflation.

There was no inflation in the 20's. This essentially for reasons given in my earlier posts, which I shall not repeat here.

There was inflation in the 20's. Inflation is an an increase in money and credit, not higher prices.

No, inflation is precisely a sustained rise in the general price level. No two ways about it.

We'll have to disagree on the definition of inflation. I'll give you this from Ludwig von Mises:

"Inflation, as this term was always used everywhere and especially in this country, means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check. But people today use the term `inflation' to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise. The result of this deplorable confusion is that there is no term left to signify the cause of this rise in prices and wages. There is no longer any word available to signify the phenomenon that has been, up to now, called inflation. . . . As you cannot talk about something that has no name, you cannot fight it. Those who pretend to fight inflation are in fact only fighting what is the inevitable consequence of inflation, rising prices. Their ventures are doomed to failure because they do not attack the root of the evil. They try to keep prices low while firmly committed to a policy of increasing the quantity of money that must necessarily make them soar. As long as this terminological confusion is not entirely wiped out, there cannot be any question of stopping inflation."

Quote Dr. Econ:

And deflation? Not a good idea. No one will invest if prices are falling.

Assuming your definition that deflation is falling prices, it is a good thing. I think you have it backwards. "What deflation does is provide a disincentive to borrow and an incentive to use current savings for purposes of investment. It means a reward for well-capitalized companies and individuals—a good thing all around. " Prices don't matter; profits do.

"Now we get to the crux of the matter: the Great Depression. The assumption is that falling prices somehow caused the economy to crumble. In fact, it was the after-effects of the boom combined with massive government intervention that caused the depression. The only silver lining in the entire period of the 1930s was precisely the falling prices that made the dollar count for more. Falling prices (a falling cost of living) are what Murray Rothbard has described as the "great advantage" of recessions. If you can imagine the Great Depression without falling prices, you have conjured up an image that is far worse than the reality.

Ask yourself whether during economic downturns, you want your money to grow or shrink in value? If your future job security is in doubt, do you want to pay more or less for goods? If your savings are meager, do you want them to have more or less purchasing power in the future? If you answer these questions rationally, you can see that deflation is wonderful for everyone, and the saving grace of a period of economic contraction. Throughout the 19th century, prices fell in periods of economic growth, which is precisely what one might expect. This is all to the good. "

LysanderSpooner's picture
LysanderSpooner
Joined:
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Quote LysanderSpooner:
Quote Dr. Econ:
Quote LysanderSpooner:
Quote Dr. Econ:
Quote Brookesmith:... During the "roaring" 1920s, the fed expanded the money supply by a staggering 62%. This lead to a period of economic boom and inflation.

There was no inflation in the 20's. This essentially for reasons given in my earlier posts, which I shall not repeat here.

There was inflation in the 20's. Inflation is an an increase in money and credit, not higher prices.

No, inflation is precisely a sustained rise in the general price level. No two ways about it.

We'll have to disagree on the definition of inflation. I'll give you this from Ludwig von Mises:

"Inflation, as this term was always used everywhere and especially in this country, means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check. But people today use the term `inflation' to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise. The result of this deplorable confusion is that there is no term left to signify the cause of this rise in prices and wages. There is no longer any word available to signify the phenomenon that has been, up to now, called inflation. . . . As you cannot talk about something that has no name, you cannot fight it. Those who pretend to fight inflation are in fact only fighting what is the inevitable consequence of inflation, rising prices. Their ventures are doomed to failure because they do not attack the root of the evil. They try to keep prices low while firmly committed to a policy of increasing the quantity of money that must necessarily make them soar. As long as this terminological confusion is not entirely wiped out, there cannot be any question of stopping inflation."

[/quote]

[/quote]

So, horsehit definition from Ludwig von Mises on a commonly agreed upon term.

Wait, maybe I am wrong, and completely slept through and failed every econ and business course I took. Let me check the definition...

What is inflation? definition and meaningwww.investorwords.com/2452/inflation.html

Definition of inflation: The overall general upward price movement of goods and services in an economy (often caused by a increase in the supply of money), ...

InflationFrom Wikipedia, the free encyclopediaJump to: navigation, searchThis article is about a rise in the general price level. For the expansion of the early universe, see Inflation (cosmology). For other uses, see Inflation (disambiguation).In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.[1] When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy.[2][3]

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Nope, von Mises is creating new meanings of widely accepted terms, because his universal theory of economics is horseshit. If you are preaching an ideology, and in order to do so you must pervert the language, then what does that make you? A liar, a deceiver, and a pervert.

Phaedrus76's picture
Phaedrus76
Joined:
Sep. 14, 2010 8:21 pm
Quote Phaedrus76:
Quote LysanderSpooner:
Quote Dr. Econ:
Quote LysanderSpooner:
Quote Dr. Econ:
Quote Brookesmith:... During the "roaring" 1920s, the fed expanded the money supply by a staggering 62%. This lead to a period of economic boom and inflation.

There was no inflation in the 20's. This essentially for reasons given in my earlier posts, which I shall not repeat here.

There was inflation in the 20's. Inflation is an an increase in money and credit, not higher prices.

No, inflation is precisely a sustained rise in the general price level. No two ways about it.

We'll have to disagree on the definition of inflation. I'll give you this from Ludwig von Mises:

"Inflation, as this term was always used everywhere and especially in this country, means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check. But people today use the term `inflation' to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise. The result of this deplorable confusion is that there is no term left to signify the cause of this rise in prices and wages. There is no longer any word available to signify the phenomenon that has been, up to now, called inflation. . . . As you cannot talk about something that has no name, you cannot fight it. Those who pretend to fight inflation are in fact only fighting what is the inevitable consequence of inflation, rising prices. Their ventures are doomed to failure because they do not attack the root of the evil. They try to keep prices low while firmly committed to a policy of increasing the quantity of money that must necessarily make them soar. As long as this terminological confusion is not entirely wiped out, there cannot be any question of stopping inflation."

[/quote]

So, horsehit definition from Ludwig von Mises on a commonly agreed upon term.

Wait, maybe I am wrong, and completely slept through and failed every econ and business course I took. Let me check the definition...

What is inflation? definition and meaningwww.investorwords.com/2452/inflation.html

Definition of inflation: The overall general upward price movement of goods and services in an economy (often caused by a increase in the supply of money), ...

InflationFrom Wikipedia, the free encyclopediaJump to: navigation, searchThis article is about a rise in the general price level. For the expansion of the early universe, see Inflation (cosmology). For other uses, see Inflation (disambiguation).In economics, inflation is a rise in the general level of prices of goods and services in an economy over a period of time.[1] When the general price level rises, each unit of currency buys fewer goods and services. Consequently, inflation also reflects an erosion in the purchasing power of money – a loss of real value in the internal medium of exchange and unit of account in the economy.[2][3]

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Nope, von Mises is creating new meanings of widely accepted terms, because his universal theory of economics is horseshit. If you are preaching an ideology, and in order to do so you must pervert the language, then what does that make you? A liar, a deceiver, and a pervert.

[/quote]

Ludwig von Mises was born in 1881!!! He wrote a book called "Socialism" is 1922. I think my whole point was that the definition of inflation that was widely accepted has been changed.

LysanderSpooner's picture
LysanderSpooner
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Jul. 31, 2007 4:01 pm

As to the title of this thread " What the Libertarians get wrong about the FED", I think they have got it right.

Scotty Boman, LP candidate from Michigan:

The Federal Reserve Act of 1913 is not only unconstitutional, it has been absolutely ruinous to our nation’s economy. Since the Fed has come into being, the U.S. dollar has lost 95% of its purchasing power — and yet the defenders of the Fed tell us its purpose is to “keep inflation under control.”

The fact of the matter is that only the government and its central bank can cause inflation. They do this by expanding the money supply. Each time the Fed creates new money, it diminishes the value of your dollar-based financial holdings. It thus imposes a hidden tax — the “inflation tax” — and redistributes wealth from the poor and working class to the rich and politically connected.

Brookesmith
Joined:
Aug. 3, 2012 7:00 pm

"It's entirely moot what so-and-so said about this or that."

From the Thesaurus of Useful Responses to Right Wingnuts

anonymous green
Joined:
Jan. 5, 2012 11:47 am
Quote Brookesmith:...The international bankers used the fed to engineer the bubble and ensuing crash. Call it what you want. But the actions taken by the fed cannot be disputed, they were what they were. And those with inside information and the well connected were able to use that info, acted accordingly and profited immensely.

Well you continue to ignore what I post, but what the hell.

First, your statements are false. First, money supply numbers are published figures. Second, as I have repeatedly said, the money supply is not the sole creation of the FED. Both the FED and the private banking system are responsible for the money supply. And lastly, banks would not lend money if they thought they would be paid off in inflated dollars. Banks are against inflation.

Lastly, the FED had received complaints to raise the discount rate or strengthen the dollar preciesely from conservative types like yoruself and it was no suprise they decided to do soemthing about it. However, they did little - so it was not the main cause of the recession (plus the Great Depression was world wide - as I mentioned before). I would happily admit to you - in case there is confusion - it was obviously the wrong thing to do. But it was precisely the advice given by conservative and free market types. Yet, If the economy was not overly leveraged (and this was prevented from financial regulatons put in afterwords), a small rise in ther interest rate would not have created a Great Depression.

Quote Brookesmith (actually Gary Allen):..Having built the Federal Reserve as a tool to consolidate and control wealth, the international bankers were now ready to make a major killing.

The 20's were hardly the first expansion where international bankers made money. The FED had nothing to do with it.

I must remind you that your theory - that the FED allows too much growth during expansions and not enough to cause recessions is not falsifiable. This is what makes your theory so pathetic. Sure, anytime there is a recession - oops, not enough money. Anytime there is an expansion - too much money. But how can prove this? You cannot. I, on the other hand, can. I look at inflation if the FED produces too much money. The fact that there was no inflation during the 20's proves the FED had the money supply right.

And you have no answer to this - except to quote more and more crap from Libertarian propagandists.

Dr. Econ's picture
Dr. Econ
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Jul. 31, 2007 4:01 pm
Quote ah2:

Econ, if the Fed does not have the ability to effect expansion and contractions in the economy then what purpose does it serve? And I don't mean the two things you already mentioned. What I mean is what does their ability to do those two things actually do in the long run? IE: Why was the Fed created?

The FED can expand an economy in recession to produce an expansion. This is what it was originally designed to do: to provide liquidity to prevent runs on banks. This does not create inflation.

But if the economy is already in expansion, and increase in money will simply increase prices and create inflation. Thus, the FED is powerless to increase output beyond full emplloyment.

The FED can also cause recessions by raising interest rates - as it did in the Reagan recession.

Dr. Econ's picture
Dr. Econ
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Jul. 31, 2007 4:01 pm
Quote Dr. Econ:

And deflation? Not a good idea. No one will invest if prices are falling.

Throughout the 19th century, prices fell in periods of economic growth, which is precisely what one might expect. This is all to the good. "

[/quote]

That's funny. I doubt this very much. Anyway, you can't do this in a monetary economy - the rise in output will increase people's demand for money and raise the interest rate, reducing investment. Perhaps this is not such a problem in agrarian societies. Actually it is, as I now remember Locke's soluton: the the demand for money rises, interest rates rise, and hence it pays to provide more gold. But to make an economy dependent on the vagraties of gold mining seems ridiculous.

Dr. Econ's picture
Dr. Econ
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Quote Brookesmith:

As to the title of this thread " What the Libertarians get wrong about the FED", I think they have got it right.

Scotty Boman, LP candidate from Michigan:

The Federal Reserve Act of 1913 is not only unconstitutional, it has been absolutely ruinous to our nation’s economy. Since the Fed has come into being, the U.S. dollar has lost 95% of its purchasing power — and yet the defenders of the Fed tell us its purpose is to “keep inflation under control.”

The fact of the matter is that only the government and its central bank can cause inflation. They do this by expanding the money supply. Each time the Fed creates new money, it diminishes the value of your dollar-based financial holdings. It thus imposes a hidden tax — the “inflation tax” — and redistributes wealth from the poor and working class to the rich and politically connected.

I think you are simply refusing to look at my arguements, because you previously believed something and nothing at all will change your mind.

Inflaton hurts owners of assets - banks and he wealthy - most. That is why they are against inflation. That's why inflation has mostly not been a problem for most of the history of the United States.

Inflation is not now a problem because current government People all over the world want to buy our government t-bills, even thoug the real return is negative. That is how safe they feel with government bonds.

But I have said this a million times already, and you will probably ignore it and give me another blind link to some conservative or libertarian web site.

Dr. Econ's picture
Dr. Econ
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Jul. 31, 2007 4:01 pm
Quote Brookesmith:

Here is another interesting little article about the fed and insiders of the 1929 crash and ensuing depression.

"The Wall Street Crash in 1929
In April, Paul Warburg sent out a secret warning to his friends that a collapse and nationwide depression had been planned for later that year.

Your yahoo links don't work. You need to quote just the stuff that is not your session.

I think this is simply a case of finding someone who predicts crashes - I think you can find one anytime of anyyear you want.

In any event, the FED simply did not act enough to start a crash of economy that was not already on the brink of destruction.

Dr. Econ's picture
Dr. Econ
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I am not ignoring your arguments (or refusing to look at them), I am not buying them. You are making the standard assumptions made by all Keynesian worshippers and you damn sure don't know how (or refuse to recognize that) the fed can manipulate the money supply and effect the economy and people with inside prior knowledge of the feds actions can use it for tremendous monetary gain.

"The Roaring Twenties

They don’t call the 1920s roaring because money wasn’t flowing freely and consumers were practicing frugality. The newly created Federal Reserve expanded credit by setting below-market interest rates and low reserve requirements that favored the big Wall Street banks. The Federal Reserve increased the money supply by 60% during the period following the recession of 1921. By the latter part of the decade, “buying on margin” entered the American vocabulary as more and more Americans overextended themselves to speculate on the soaring stock market.

The mainstream media’s popular narrative about the causes and cure for the Great Depression invariably start with the storyline that the stock market crash caused the Great Depression. Herbert Hoover purportedly refused to spend government money in an effort to reinvigorate the economy. Franklin Delano Roosevelt’s New Deal government spending programs allegedly saved America.

This storyline is a big lie.

The Great Depression was caused by Federal Reserve expansion of the money supply in the 1920s that led to an unsustainable credit-driven boom. When the Federal Reserve belatedly tightened in 1928, it was too late to avoid financial collapse. According to Murray Rothbard, in his book America’s Great Depression, the artificial interference in the economy was a disaster prior to the depression, and government efforts to prop up the economy after the crash of 1929 only made things worse. Government intervention delayed the market’s adjustment and made the road to complete recovery more difficult."

You can remain ignorant if you want, but you can't change the facts of history and the actions taken by a few elite insiders. Here is the rest of the article. I doubt you are openminded enough to read it though.

http://search.yahoo.com/r/_ylt=A0oGklFwCClQl0UAEwVXNyoA;_ylu=X3oDMTE1aGRrM2ZvBHNlYwNzcgRwb3MDMgRjb2xvA3NrMQR2dGlkA1ZJUDA0OV8xNTQ-/SIG=12i7jiher/EXP=1344895216/**http%3a//standstrongresearch.com/depression-within-a-depression/

I also can't firgure out why you insist on labeling everything that disputes your Keynesian bullshit as libertarian. Facts are facts, whether they fit the progrssive meme or not.

Brookesmith
Joined:
Aug. 3, 2012 7:00 pm
Quote Dr. Econ:
Quote ah2:

Econ, if the Fed does not have the ability to effect expansion and contractions in the economy then what purpose does it serve? And I don't mean the two things you already mentioned. What I mean is what does their ability to do those two things actually do in the long run? IE: Why was the Fed created?

The FED can expand an economy in recession to produce an expansion. This is what it was originally designed to do: to provide liquidity to prevent runs on banks. This does not create inflation.

Printing money or providing liquidity is couterfeiting. It cannot create wealth. Credit and currency aren't wealth. Inflation, the increase in the quantity of money and credit, is a tax.

Increased interest rates are the cure for the phony boom.

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LysanderSpooner
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Jul. 31, 2007 4:01 pm
Quote Brookesmith:

I am not ignoring your arguments (or refusing to look at them), I am not buying them. You are making the standard assumptions made by all Keynesian worshippers and you damn sure don't know how (or refuse to recognize that) the fed can manipulate the money supply and effect the economy and people with inside prior knowledge of the feds actions can use it for tremendous monetary gain.

"The Roaring Twenties

They don’t call the 1920s roaring because money wasn’t flowing freely and consumers were practicing frugality. The newly created Federal Reserve expanded credit by setting below-market interest rates and low reserve requirements that favored the big Wall Street banks. The Federal Reserve increased the money supply by 60% during the period following the recession of 1921. By the latter part of the decade, “buying on margin” entered the American vocabulary as more and more Americans overextended themselves to speculate on the soaring stock market.

The mainstream media’s popular narrative about the causes and cure for the Great Depression invariably start with the storyline that the stock market crash caused the Great Depression. Herbert Hoover purportedly refused to spend government money in an effort to reinvigorate the economy. Franklin Delano Roosevelt’s New Deal government spending programs allegedly saved America.

This storyline is a big lie.

The Great Depression was caused by Federal Reserve expansion of the money supply in the 1920s that led to an unsustainable credit-driven boom. When the Federal Reserve belatedly tightened in 1928, it was too late to avoid financial collapse. According to Murray Rothbard, in his book America’s Great Depression, the artificial interference in the economy was a disaster prior to the depression, and government efforts to prop up the economy after the crash of 1929 only made things worse. Government intervention delayed the market’s adjustment and made the road to complete recovery more difficult."

You can remain ignorant if you want, but you can't change the facts of history and the actions taken by a few elite insiders. Here is the rest of the article. I doubt you are openminded enough to read it though.

http://search.yahoo.com/r/_ylt=A0oGklFwCClQl0UAEwVXNyoA;_ylu=X3oDMTE1aGRrM2ZvBHNlYwNzcgRwb3MDMgRjb2xvA3NrMQR2dGlkA1ZJUDA0OV8xNTQ-/SIG=12i7jiher/EXP=1344895216/**http%3a//standstrongresearch.com/depression-within-a-depression/

I also can't firgure out why you insist on labeling everything that disputes your Keynesian bullshit as libertarian. Facts are facts, whether they fit the progrssive meme or not.

I would also add that Herbert Hoover was not a "do nothing" laissez faire President. He was the 1st New Dealer. FDR just piggybacked on what Hoover started. FDR also ran against Hoover's big-spending ways in 1932. Of course, FDR was a lying skunk who got us into WWII. But that's OK. Democrat warmongers can always be excused.

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LysanderSpooner
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Jul. 31, 2007 4:01 pm

Well, the Fed can directly expand the money supply to the financial sector...not to the circular loop of the production and exchange of goods and services. Only Congress can authorize that.

It's primary purpose was to be a banksters bank....to keep banks from going under during a run on a bank. In the Great Depression, it failed in that. Bigger banks gobbled up the smaller ones, just as they've recently done. Afterall, the bigger banks, then, as now, run it. They own all the shares in it. (Yep, the Fed issued shares in the Fed)..Their crony friends in the larger banks share in the looting. Banksters associate with banksters...not with hamburger flippers.

Booms and busts were in about a ten year cycle before the Fed was established. It ameliorated that somewhat.

As to gold/silver based currency limtiing the money supply, it does do that. However, increases in population and productivity wouldn't see an increase in the money supply to provide for the exchanges. Too much gold is also bad.

Spain had its worst inflation when it used gold coins. Too many gold coins, and not enough to buy with them.

During the Great Depression, Germany had no gold to back it's currency. It used German productivity to back it...and quickly became the most sought after stable currency in the world. "Stuff" backed its currency. It led the world out of the Great Depression. Gold/silver backed currencies lagged behind.

If we had a true Central Bank, government could just issue money to buy up idle productive capacity. without borrowing.

As long governments don't issue money in excess of idle capacity, there is no inflation...just an increase in productivity. The increased production backs the currency. Germans discovered that in the Great Depression.

We don't have a true Central Bank. We have a banksters bank...same as most countries.

Retired Monk - "Ideology is a disease"

polycarp2
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Jul. 31, 2007 4:01 pm

Murray Rothbard, "Hoover's role as founder of a revolutionary program of government planning to combat depression has been unjustly neglected by historians. Franklin D. Roosevelt, in large part, merely elaborated the policies laid down by his predecessor. To scoff at Hoover's tragic failure to cure the depression as a typical example of laissez-faire is drastically to misread the historical record. The Hoover rout must be set down as a failure of government planning and not of the free market."

Hoover was bad enough, but for FDR to be hailed as the hero, is to ignore the facts of history.

Brookesmith
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Aug. 3, 2012 7:00 pm

You're still under the illusion we have a free market system. We don't. Our system has been a regulated market system since its inception centuries ago. Our current system re-placed the "free market" system of reciprocal markets violently. The world powers of the day even forbid their colonies to engage in them. Polyani's work, "The Great Transformation", explains it pretty well.

Hoover's "balance the budget" nonsense worsened the Depression. (just as it currently is in Europe) Hoover began taking steps to correct it. FDR picked up the same ball when he was told he had a year before a civil uprising occurred that the then small army wouldn't be able to put down. He saved America's elite from being hung from lamposts and the Constitution from being thrown into a bonfire..

Stimulous spending (wealth re-distribution) lowered unemployment dramatically. When it was cut back, we had the recession of 1937.

Government spending for World War II was finally enough to end the Depression. We could have had the same effect by buying everyone a new car, washing machine or refrigerator instead of a new tank, jeep or bomber.

Retired Monk - "Ideology is a disease"

.

polycarp2
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Jul. 31, 2007 4:01 pm

What FDR did was to raise Hoover top marginal tax rate of 63% to 79% and stick Americans in the ass with the phony SS tax. He also raised taxes on corporate incomes, excess profits and inheritance.

He also enacted excise taxes levied on all kinds of different products. Alcohol, cigarettes, matches, candy, gum, margarine, fruit juice, soft drinks, cars, tires (including wheelchair tires), telephone calls, movie tickets, playing cards, electricity, and radios are examples of the products that had excise taxes put on them. These excise taxes were mostly paid by middle and lower income people - the very people The New Deal was supposed to help.

One of his worst programs was the National Industrial Recovery Act (NIRA) which forced industries to pay higher than market wages which lead to LESS hiring and higher prices for consumers. A program to provide low interest government loans to struggling businesses was used by government bureaucrats to give loans to thier buddies. Things were not good.

FDR may have bought his four terms in office by distributing more Federal dollars where it would benefit his political career the most.

Yes,FDR is continuously touted as the model for liberal fiscal policy, and we can clearly see the New Deal was an expensive and miserable failure due to government intervention. Keynesian economics at its worst er best. Does anyone see any similarities to what is happening today?

I have no such illusion that we have a free market system. I do see us as having a corporate/government colluded market that creates unfair, uncompetitive advantages to certain influential players.

Brookesmith
Joined:
Aug. 3, 2012 7:00 pm
Quote Brookesmith:

I am not ignoring your arguments (or refusing to look at them), I am not buying them. You are making the standard assumptions made by all Keynesian worshippers and you damn sure don't know how (or refuse to recognize that) the fed can manipulate the money supply and effect the economy and people with inside prior knowledge of the feds actions can use it for tremendous monetary gain.

No. I am proving all your points wrong, inconsistent and illogical, and you are ignoring all of them.

You have not responded to them.

If you disagree with my points, then tell me exactly what it is you disagree with. Instead, you just repost crap someone else wrote all over again.

Let me give you a example. You say the 'Fed increased the money supply', and quote some monetary aggregate that has increased. I have said that the FED is not responsible for the money supply, in that banks also increase the money supply by increasing the amounts of loans.

You have not responded to this point several times now.

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Dr. Econ
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Jul. 31, 2007 4:01 pm

The fed can manipulate the supply of money. you are ignorant of how the fed and banking system work. I was in banking for 17 1/2 years. You keep ignoring my responses.

http://search.yahoo.com/r/_ylt=A0oGdXIbvSlQik4ACERXNyoA;_ylu=X3oDMTE1dnEzMXRmBHNlYwNzcgRwb3MDNARjb2xvA3NrMQR2dGlkA1ZJUDA0OV8xNTQ-/SIG=1215n3uir/EXP=1344941467/**http%3a//site.xavier.edu/turnerc1/lecture18.pdf

Educate yourself a little.

Brookesmith
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Aug. 3, 2012 7:00 pm
Quote LysanderSpooner: Printing money or providing liquidity is couterfeiting. It cannot create wealth. Credit and currency aren't wealth. Inflation, the increase in the quantity of money and credit, is a tax.

Actually, I think I can prove you wrong from your own belief. Isn't this exactly what a gold miner does - in effect cause the same thing as counterfiting? We may be already having this discussion on another thread, but consider two people, Mr. Fed and Mr. 49er.

Let us say some start hoarding gold, withdrawing it from circulation and reducing spending. There is higher demand for gold, raising interest rates and... the price of gold relative to other things. This makes Mr. 49er be able to pay for another worker to mine more gold. The increase in gold then lowers the interest rate to the original level. Investment and spending go on as before.

Now, there is Mr. FED, he sees hoarding and anticipates high interest rates. He then buys bonds, putting cash into circulation. the interest rates also fall and investment and spending go as before.

So the FED plays the role of 49er in a modern economy. It produces liquidity. Printing money does not create wealth, but it allows it to be created, much like a spigot on a circular flow of income.

Now, too much money will obviously create inflation.

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Dr. Econ
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Jul. 31, 2007 4:01 pm
Quote Brookesmith:

What FDR did was to raise Hoover top marginal tax rate of 63% to 79% and stick Americans in the ass with the phony SS tax. He also raised taxes on corporate incomes, excess profits and inheritance.

He also enacted excise taxes levied on all kinds of different products. Alcohol, cigarettes, matches, candy, gum, margarine, fruit juice, soft drinks, cars, tires (including wheelchair tires), telephone calls, movie tickets, playing cards, electricity, and radios are examples of the products that had excise taxes put on them. These excise taxes were mostly paid by middle and lower income people - the very people The New Deal was supposed to help.

One of his worst programs was the National Industrial Recovery Act (NIRA) which forced industries to pay higher than market wages which lead to LESS hiring and higher prices for consumers. A program to provide low interest government loans to struggling businesses was used by government bureaucrats to give loans to thier buddies. Things were not good.

FDR may have bought his four terms in office by distributing more Federal dollars where it would benefit his political career the most.

Yes,FDR is continuously touted as the model for liberal fiscal policy, and we can clearly see the New Deal was an expensive and miserable failure due to government intervention. Keynesian economics at its worst er best. Does anyone see any similarities to what is happening today?

I have no such illusion that we have a free market system. I do see us as having a corporate/government colluded market that creates unfair, uncompetitive advantages to certain influential players.

So you come here to spout these opinions and provide no facts? Why do you think people will believe this? If you post this on a Libertarian board, people will accept your opinions as fact. But here? Seriously?

Dr. Econ's picture
Dr. Econ
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Quote Brookesmith:

You keep ignoring my responses.

"It's very perceptive that you realize that your vacuous statements and questions are simply being ignored."

The Thesaurus of Useful Responses To Right Wing Manchurian Americans

anonymous green
Joined:
Jan. 5, 2012 11:47 am
Quote Dr. Econ:So you come here to spout these opinions and provide no facts? Why do you think people will believe this? If you post this on a Libertarian board, people will accept your opinions as fact. But here? Seriously?

It is not opinion. Are you trying to claim that FDR did not raise the top marginal tax rate? In fact he did. Are you saying he did not raise taxes on corporate incomes, excess profits, or inheritence? Prove it. Are you saying he did not enact an excise tax on a host of goods and services that would burdened middle and lower income people more? Who do those type of regressive taxes hit hardest, if not middle and lowere incomes? Are you saying that there was never the NIRA, that actually hindered emplyment. ? I'd love for you to try to disprove that. If I have said anything here that is not fact, prove it.

" The National Industrial Recovery Act of 1933, in particular, gets a lot of blame. It created the National Recovery Administration, a federal bureaucracy that limited competition in various industries by setting prices and wages above market levels. The ensuing upward pressure on the price of goods and unemployment may have turned a bad situation worse. While it benefited some producers, the NRA's policies meant basic goods were more expensive for consumers and jobs harder to come by for people who were already in dire straits."

http://search.yahoo.com/r/_ylt=A0oGdUYiIypQ51UALa5XNyoA;_ylu=X3oDMTE1OThhbHNqBHNlYwNzcgRwb3MDOQRjb2xvA3NrMQR2dGlkA1ZJUDA0OV8xNTQ-/SIG=13ctpmgag/EXP=1344967586/**http%3a//money.usnews.com/money/business-economy/articles/2008/04/11/did-the-new-deal-work

Brookesmith
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From Brookesmith's post #4:

Wilson, who later regretted it said, "I am a most unhappy man. I have unwittingly ruined my country. A great industrial nation is now controlled by its system of credit. We are no longer a government by free opinion, no longer a government by conviction and the vote of the majority, but a government by the opinion and duress of a small group of dominant men". Congress man Lous Mcfadden also expressed the truth after the passage of the bill "A world banking system was being set up here . . . a superstate controlled by international bankers . . . acting together to enslave the world for their own pleasure. The Fed has usurped the government."

'A great industrial nation is now controlled by its system of credit'. What does create wealth in an economy? Is it the derivative manipulations of the financial markets that the present 'free marketeers' say it is? Is it the military power to control the most valuable assets as was started in the Bush/Cheney era with the Middle East and oil? Is it what the English philosopher, John Locke, said over 300 years ago--labor creates private property and labor creates market value?

Maybe the answer of what creates wealth can be adjusted by adding who profits off of however 'wealth' is defined. I actually prefer Locke's definition because it seems to be the most natural and humanisitic characterization. And, if you add Ravi Batra's idea that 'wealth disparity' is what actually creates all economic recessions and depressions because, in high wealth disparity times (where the rich own more and more of all the wealth and production of a country), the average worker-consumer (Locke's 'market value creators') has less wealth and money to purchase products creating less demand, then, the question can be added, is there a role for wealth distribution in an democratic government? However, instead of it being just a 'tax the rich and give it to the poor' perspective, maybe it could be something like an egalitarian quotient regulation on major industries. As I understand it, what an egalitarian quotient is is the difference in income between the highest paid CEO of a corporation to the lowest paid worker of that corporation. American quotients have become huge--on the order of the highest paid CEO making 300 to 500 times more than the lowest paid janitor. But, that wasn't always the case. Before Reaganomics and its 'free market scam' took over, the quotient was more in line with what it is now in most other countries, about 40:1. So, let's set it at 40:1--that would have more of the wealth go to the laborers to begin with and not require government to 'tax the rich and give it to the poor'. And, for international corporations, the quotient should still be in effect. So, when a company goes over to China to have the workers work at $1000/yr., with a 40:1 egalitarian quotient regulation, that CEO could only make $40,000/yr. I wonder how many corporations would go over to China then?

At any rate, an egalitarian quotient appears to me to be a more effective way of distributing productive wealth (as Locke says, what labor creates) in order to maintain the purchasing power of the average worker-consumer more so than just a 'tax the rich to give to the poor' perspective would. Also, it has government not commanding production or any wealth distribution on its own, but, as what government should be doing (regulating), it sets up a system that could still maintain its production (without having to create a 'welfare class' where 'the poor get from the rich' without being involved in production) and do so in a manner that curbs the incentive to increase wealth disparity to begin with--with wealth disparity being what Ravi Batra says is the most prominent cause of all economic recessions and depressions.

But, as long as government is in collusion with the corporate moguls, that won't happen, will it? No matter how reasonable and rational the proposal....and, besides that, as this forum seems to be getting more and more biased to me as the years go by, if it comes from someone that claims to be a 'libertarian', it's got to be wrong, right Dr. Econ?

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Kerry
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Jul. 31, 2007 4:01 pm

Personally, Kerry, I think the "wealth quotient" in earnings would be a good idea and have thought so for many years.

Your above post explains the justifications for it as well as the benefits.

Retired Monk - "Ideology is a disease"

polycarp2
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Jul. 31, 2007 4:01 pm
Quote Brookesmith: I'd love for you to try to disprove that. If I have said anything here that is not fact, prove it.

You will never learn anything if you don't do your own research. You can't just spam propaganda from the CATO institute.

Dr. Econ's picture
Dr. Econ
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Jul. 31, 2007 4:01 pm
Quote Brookesmith:

The fed can manipulate the supply of money. you are ignorant of how the fed and banking system work. I was in banking for 17 1/2 years. You keep ignoring my responses.

http://search.yahoo.com/r/_ylt=A0oGdXIbvSlQik4ACERXNyoA;_ylu=X3oDMTE1dnEzMXRmBHNlYwNzcgRwb3MDNARjb2xvA3NrMQR2dGlkA1ZJUDA0OV8xNTQ-/SIG=1215n3uir/EXP=1344941467/**http%3a//site.xavier.edu/turnerc1/lecture18.pdf

Educate yourself a little.

I quoted you in full to prove to you, once and for all, that you ignore every single one of my points.

Dr. Econ's picture
Dr. Econ
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Jul. 31, 2007 4:01 pm
Quote LysanderSpooner: Of course, FDR was a lying skunk who got us into WWII. .

There is a broad consensus that without our participation in WWII, Nazi Germany would have taken over Europe and England, and millions more Jews, gypsies, homosexuals would have died. Japan's military dictatorship would have controled China, and the far east.

To say that FDR was a 'lying skunk' seems a bit cruel and harsh.

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Dr. Econ
Joined:
Jul. 31, 2007 4:01 pm

Dr Econ, I have responded to everyone of your opinionated points with facts and cite to back them up. But in typical lib progressive fashion you ingnore or obfuscate any of my points you disagree with, because you know you are wrong and can't disprove anything I have said here. Do you even read my sources or in tyrpical lp fashion just dismiss them as libertarian or right wing or conservative or whatever because they don't fit the fantasies and lies of your mantra.

The fed caused the depression with their manipulations of the money supply and interest rates and those elite with inside connections were able to short sell their stocks before the crash and then buy them back for pennies on the dollare after the crash. And FDR's actions or whoever was pulling his strings only made the depression worse for middle and low income people. Keynesian voodoo bullshit economics does nothing but make excuses and distract from the truth.

Brookesmith
Joined:
Aug. 3, 2012 7:00 pm
Quote Brookesmith:

Dr Econ, I have responded to everyone of your opinionated points with facts and cite to back them up.

Name one.

Dr. Econ's picture
Dr. Econ
Joined:
Jul. 31, 2007 4:01 pm
Quote Dr. Econ:
Quote LysanderSpooner: Of course, FDR was a lying skunk who got us into WWII. .

There is a broad consensus that without our participation in WWII, Nazi Germany would have taken over Europe and England, and millions more Jews, gypsies, homosexuals would have died. Japan's military dictatorship would have controled China, and the far east.

To say that FDR was a 'lying skunk' seems a bit cruel and harsh.

Then why lie us into war. Why not come out openly and honestly, and try convince the American people, through their elected representatives, to declare war earlier?

LysanderSpooner's picture
LysanderSpooner
Joined:
Jul. 31, 2007 4:01 pm
Quote LysanderSpooner:
Quote Dr. Econ:
Quote LysanderSpooner: Of course, FDR was a lying skunk who got us into WWII. .

There is a broad consensus that without our participation in WWII, Nazi Germany would have taken over Europe and England, and millions more Jews, gypsies, homosexuals would have died. Japan's military dictatorship would have controled China, and the far east.

To say that FDR was a 'lying skunk' seems a bit cruel and harsh.

Then why lie us into war. Why not come out openly and honestly, and try convince the American people, through their elected representatives, to declare war earlier?

I find it interesting that you are demanding honesty when you are not. You said you were leaving this forum and you haven't.

Recovering conservative2's picture
Recovering cons...
Joined:
Feb. 14, 2011 11:01 am
Quote Brookesmith:The fed can manipulate the supply of money. you are ignorant of how the fed and banking system work. I was in banking for 17 1/2 years. You keep ignoring my responses.

http://search.yahoo.com/r/_ylt=A0oGdXIbvSlQik4ACERXNyoA;_ylu=X3oDMTE1dnEzMXRmBHNlYwNzcgRwb3MDNARjb2xvA3NrMQR2dGlkA1ZJUDA0OV8xNTQ-/SIG=1215n3uir/EXP=1344941467/**http%3a//site.xavier.edu/turnerc1/lecture18.pdf

Educate yourself a little.

Brookesmith wrote:

Dr Econ, I have responded to everyone of your opinionated points with facts and cite to back them up.

Name one.

See above link.

Dr Econ, "Just to repeat myself, the FED cannot continually increase the money supply because there would be inflation, and inflation would mean that bankers would increase the interest rate. And no, before you have another knee jerk reaction, there was no price inflation in the 20's."

Quote, "The late Murray Rothbard was the chief proponent of this argument. Rothbard’s problem is manifest in his book America’s Great Depression. After endowing the useful word “inflation” with a new and unacceptable meaning, Rothbard “discovered” that the Federal Reserve had indeed provoked an inflation in the 1921–1929 period. The money supply he examined for the period included not only hand-to-hand currency and all deposits in commercial banks adjusted for inter-bank holdings—the conventional M2 money stock—but also savings and loan share capital and life insurance net policy reserves. Consequently, where the M2 money stock increased 46 percent over the period, or at an annual rate of about 4 percent, the Rothbard-expanded “money stock” increased by 62 percent, or about 7 percent per year.[2]"

http://search.yahoo.com/r/_ylt=A0oGdWLkCitQKyIAH_lXNyoA;_ylu=X3oDMTE1MWw2MWlxBHNlYwNzcgRwb3MDNwRjb2xvA3NrMQR2dGlkA1ZJUDA0OV8xNTQ-/SIG=12qk0js02/EXP=1345026916/**http%3a//www.thefreemanonline.org/features/money-in-the-1920s-and-1930s/

The fed increased the money supply by 40-60% depends on which definition of the MS one chooses. I'a begining to think one could slap you in the face with factual proof and if it didn't fit you mantra it was false. Bullshit!

Brookesmith
Joined:
Aug. 3, 2012 7:00 pm

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